S&P bounces back with Best Week of 2024

U.S. equities ended Friday on a strong note, with the S&P 500 advancing 0.5%, the Dow Jones rising 0.7%, and the Nasdaq gaining 0.7%. For the week, the S&P 500 rose 4%, the Nasdaq surged 6%, and the Dow gained 2.6%. Growth sectors like info tech led the way, with semiconductor shares up nearly 10%. European equities also rallied, but U.S. markets outperformed for the day and the week amid optimism over potential Federal Reserve rate cuts.

Summary for 16.09.2024

Asian markets were mostly muted in holiday-thinned trade on Monday, with China, Japan, and South Korea closed. Hong Kong’s Hang Seng index fell 0.6% after weak Chinese economic data, including rising unemployment and declining house prices, heightened concerns over China’s slowdown. Broader Asian markets, including Australia, saw limited gains amid speculation over U.S. interest rate cuts, with the Federal Reserve expected to lower rates this week.

European and U.S. markets are expected to open with minimal changes, as U.S. equity futures and the dollar remained steady following news of an assassination attempt on Trump, while traders await the Federal Reserve's interest rate decision later this week.

Oil prices rose slightly in Asian trade this morning, supported by a softer dollar and anticipation of a Federal Reserve rate cut. Gains were limited by persistent concerns over weak Chinese economic data, including disappointing industrial production and retail sales, and higher U.S. production post-Hurricane Francine. Market holidays in China and Japan kept trading volumes low.

Chinese industrial production grew 4.5% in August, below expectations and down from July’s 5.1%, while retail sales increased by 2.1%, missing the forecast of 2.5%. Unemployment rose to 5.3%, and fixed asset investment also fell short of expectations. These weak economic indicators, coupled with declining house prices, suggest that further stimulus measures may be needed, although ANZ kept its Q3 GDP growth forecast at 4.7%.

Uber Technologies will expand its partnership with Alphabet's Waymo to introduce ride-hailing services with fully autonomous, electric Jaguar I-PACE vehicles in Austin and Atlanta early next year. Shares of Uber and Alphabet rose following the announcement. This move aligns with Uber's strategy to partner with electric and autonomous vehicle firms, following the sale of its own self-driving division in 2020.

Shares of Adobe fell over 8.0% on Friday after the company issued a disappointing fourth-quarter earnings forecast, projecting revenue of $5.50-$5.55 billion versus an expected $5.61 billion. The lower forecast raised concerns that Adobe's investments in AI design will take longer to pay off. Despite this, Adobe expects strong growth in its annual recurring revenue and healthy subscription sign-ups.

More than 30,000 Boeing workers started a strike on Saturday, following a vote by factory employees in the US Pacific Northwest demanding higher pay. The strike, Boeing's first major labour action since 2008, led to a 3.t% drop in shares during Friday's session. Boeing faces additional challenges as it struggles with quality issues and seeks to address worker demands amid ongoing scrutiny. Analysts are concerned about the potential impact on 737 MAX production levels.

Citi reinstated its Buy rating on Eli Lilly & Co. with a $1,060 target price, citing improved forecasts for its tirzepatide treatment for diabetes and obesity. The rating return reflects a boost in EPS estimates by up to 19% for 2024-27. Citi's analysis notes reduced competitive threats and positions Eli Lilly alongside Merck as a preferred U.S. pharmaceutical equity.

Canaccord Genuity analysts are optimistic about Tesla's 3Q24 results, forecasting deliveries of 469.2k vehicles, above the 458k consensus, despite a slight drop from their prior estimate. They project 2024 deliveries will reach 1.85 million, surpassing the 1.78 million consensus. For 3Q24, they expect non-GAAP EPS of $0.75, beating the $0.61 consensus, driven by strong sales in China and aggressive pricing strategies.

Roche is facing mixed reviews from brokerages. BofA Securities upgraded Roche to "buy" with a target price of CHF 340, citing a recovery in EPS and strong pipeline prospects, including key drugs like Giredestrant and Fenebrutinib. In contrast, Deutsche Bank downgraded Roche to "sell" with a target price of CHF 235, expressing concerns over R&D productivity, diminishing innovation, and competition in the obesity market.

BTIG forecasts the S&P 500 could exceed 5700 in the coming weeks, driven by a shift in expectations for a 50bps Fed rate cut, now at 45-50%. They also note gains in small-cap shares and rising gold prices. Concurrently, Deutsche Bank has raised its year-end target for the S&P 500 to 5750, anticipating a rebound from the current pullback and a strong rally post-election, underpinned by broad earnings growth and stable valuations.

The week ahead includes key U.S. data like August retail sales on Tuesday and housing starts on Wednesday, alongside the Fed's rate decision on Thursday. Globally, the Bank of England and Bank of Japan hold rate-setting meetings. On the corporate front, FedEx, Lennar, and Darden Restaurants report in the U.S., while international markets watch European and Asian developments, with some major Asian markets closed early in the week.

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